Building Blocks for Successful Commercial Dispute Resolution Centres

Cuba_Stones on beach_0.jpgOur work for three dispute resolution centres in Northern Ireland, Nigeria and Dubai has got us thinking about what makes an effective institution and an attractive offer for clients. In this series of articles, we share some of the findings of our comparative study of 11 centres in Europe, North America and Asia.


Part 4: A Coherent Promotional Strategy

No single jurisdiction appears to have a single, coherent initiative which highlights its full range of CDR options and strengths. The different strands of CDR are often promoted separately, and usually left to service providers or centres operating as commercial entities to promote themselves. Of these, the most successful share the following characteristics:

A collective approach including the support of the government, judiciary, CDR institutions active in the jurisdiction and legal practitioners.  England & Wales, Scotland and Singapore all provide useful examples of ‘joined-up’ CDR centre promotion.  They are by no means perfect, but each has elements to recommend in its approach.  England and Wales is a positive example of both branches of the profession uniting to promote the jurisdiction, and working with government to promote the sector as a significant income generator.  Collaboration between the parties was probably greatest around the time of the launch of the Rolls Building and the ‘Unlocking Disputes Campaign’ in 2010, but has since tailed off.

Scotland has adopted a similar approach. In March 2013, a group was established to coordinate the promotion of the Scottish legal and dispute resolution services to an international market.  The group brings together representatives of UK and Scottish governments, the legal profession, the alternative dispute resolution sector, business organisations and international agencies with the aim of achieving a consistent approach to the promotion of the Scottish legal profession and of Scotland as a forum for dispute resolution.

Singapore has the Singapore Academy of Law, a statutory body responsible for the promotion and development of Singapore’s legal industry. Its mandate includes building up the intellectual capital of the legal profession, promoting Singapore as a centre for dispute resolution and improving the efficiency of legal practice through technology. It has a membership of over 10,000, comprising the Bench, all persons who are called as advocates and solicitors of the Supreme Court, or who are appointed as Legal Service Officers, corporate counsel, faculty members of the two local law schools and foreign lawyers in Singapore.  This membership enables Singapore to take a joined-up approach to promotion and reform.

Long term approach: Both Scotland and Singapore have also taken a long term evolutionary approach to their promotional efforts. Singapore has been slowly building up its CDR offering since the early 2000s. Its initial focus was on arbitration and the creation of the Singapore International Arbitration Centre (SIAC) which has won business throughout the region and beyond. As this grew in success, SIAC launched the Singapore International Mediation Centre in 2014 and the Singapore International Commercial Court in 2015. The objective is now to increase the use of Singapore law as a law of regional contract. This illustrates how a steady but consistent approach, building on an evidence base and track record can pay dividends. However, this requires commitment of many parties over a period of time and willingness to devote resources to the effort.

Targeted marketing:  Successful CDR centres choose an audience and address it directly. Scotland has chosen the energy sector and is targeting energy related businesses active in international markets as well as lawyers from energy-led economies (e.g. Nigeria and Ghana in particular). Singapore has chosen Indian, Chinese and Indonesian businesses and has often run government-led roadshows in neighbouring jurisdictions to attract business. Dubai (the DIFC Courts) began by providing dispute resolution services to businesses located in the Dubai International Financial Centre but expanded to target any international corporate doing business in the Middle East.

Innovation: Successful CDR centres are constantly innovating and projecting that image. The Civil Justice Council (CJC) in England and Wales is a good example of this. The CJC is a public advisory body which was established under the Civil Procedure Act 1997 through which it was given responsibility for overseeing and co-ordinating the modernisation of the civil justice system. Members of the CJC are drawn from across the legal spectrum and meets at least three times a year to discuss and agree formal responses to consultation papers. It also provides advice to the Lord Chancellor, the Judiciary and Civil Procedure Rule Committee on the effectiveness of aspects of the civil justice system, and makes recommendations to test, review or conduct research into specific areas.  Another interesting example emanates from the Netherlands, where the Hague Institute for the Internationalisation of Law (HiiL) leads international thinking on the use of online dispute resolution in family cases through a system known as the “Rechtwijzer”.

Collegiality: Our research found that firms and legal practitioners play a crucial role in promoting their individual CDR expertise as well as their jurisdiction’s strengths. Individuals benefit from the perception of the jurisdiction as a centre of excellence for dispute resolution, whilst the more individuals who promote themselves as capable dispute resolution practitioners, the more the depth and breadth of the cluster is reinforced.  

Part 3: The Cluster Effect - Lessons from the UK

The development of a dispute resolution cluster also creates a major advantage for a CDR centre. Paris has long been a prominent arbitration centre and through this longevity has developed a rich ecosystem to support arbitration activity; lawyers, arbitrators, translators, support professionals, not to mention institutions. Similarly, London has managed to develop this depth across the full range of CDR options: litigation, arbitration and mediation. 

It is the whole CDR ecosystem that provides London with its main competitive advantage and means that, for the time being at least, the expertise of its lawyers, judiciary and institutions will continue to be considered the best in the world and therefore the first choice of CDR forum for many businesses. This despite the fact that there are cheaper, more convenient and even more technologically advanced options.

Small jurisdictions cannot easily replicate this kind of depth and therefore need to consider how else to relate to such dominant existing centres.  Those who are geographically remote from London and Paris can choose the regional route but the choice is more difficult for those centres that are nearby.

The available evidence suggests that the regional English CDR centres (the Mercantile Courts) have benefited to some extent from their proximity to London. They receive spill-over work from the London courts, which the UK government is keen to encourage to ease the burden on the London commercial courts. However, it has been more difficult for the regional centres to differentiate themselves and promote themselves internationally due to their proximity to a larger, more prominent CDR centre.  When the London Commercial Court rejected a request made by the Manchester Mercantile Court to call itself the Manchester Commercial Court, it did so to protect its brand, much to the detriment of the regional centres’ brands. 

Scotland has also struggled with this issue and commissioned a report into the reasons businesses may choose English rather than Scots law in contracts and litigate in the English rather than the Scottish courts (http://www.gov.scot/Publications/2008/10/30105800/2).  This concluded that:

•    The combination of scale, harmonisation, and global recognition made it difficult for Scottish lawyers to persuade clients to choose Scots Law over English Law.

•    There were geographical/ logistical barriers: parties were reluctant to commit to a case being heard "up North" with the perceived inconvenience of logistical issues such as travel and lack of familiarity. 

•    Delays: (real or perceived) in obtaining dates for debates and proofs and in receiving judgments were identified by businesses as a particular concern and an area in which Scotland compared unfavourably to some other jurisdictions.

•    Specialisation: although many commercial disputes were heard by specialist Commercial Court judges and sheriffs, other disputes involving businesses were still heard by judges and sheriffs who may have had little or no expertise in the legal fields involved, at least in the first instance.

•    Case management: the level of case management applied to commercial cases sometimes varied between courts, but the effective use of case management was identified by businesses as a key factor in ensuring that cases are driven forward to an outcome efficiently and with reasonable speed. 

•    Mediation: although mediation is available in Scotland, it is still not as regularly utilised in commercial disputes as in other jurisdictions (e.g. England) and receives only ad hoc judicial support. 

•    Arbitration: many commercial contracts contain provision for arbitration, but except in construction disputes, comparatively little commercial arbitration took place in Scotland.


Part 2: A Unique Selling Point is Essential

Many of the centres we looked at have chosen a specialism that is connected to the strategic economic direction of their country. In the case of Scotland, for example, the creation of an energy arbitration centre is designed to complement the emphasis on developing Scotland’s international energy business. It may take some time for arbitration business to flow to the centre but that is recognised as part of the strategic calculation.

Similarly, in Delaware, the USP derives from the whole system of corporate law - from the legislation through to the role the courts play and the wider supporting infrastructure. The State makes over $1 billion from its incorporation business and is the centre for incorporation of 60% of all US publicly traded companies:

•    Delaware’s business laws help companies plan to avoid litigation (although some major corporations are now complaining that recent changes have made it too easy to launch shareholder class actions).

•    The specialist Chancery Court issues decisions without jury trials. Decisions are written, well thought-out and easy to follow.

•    Delaware has the incumbency advantage: Legal textbooks rely heavily upon Delaware corporate case law to teach law students, so most American corporate attorneys have studied Delaware corporate law and this makes Delaware a natural choice for dispute resolution.

•    The Delaware Division of Corporations generates a considerable amount of revenue for the State, so they have invested in state-of-the-art imaging equipment, and process new filings very quickly.

Whilst Delaware’s specialist offering is very broad, at the other end of the spectrum, the Isle of Man has selected a very niche area. It has chosen the space industry as one of its selling points and the government has led a cross-sectoral approach to promote the island for space business (http://www.spaceisle.com/sector.html). This highlights that:

•    The Isle of Man has more International Space University (ISU) graduates working in its space and finance industry per head of population than any other jurisdiction in the world.

•    The Isle of Man is recognised as a leading niche player focused on cutting edge space asset financing.

•    The Isle of Man is home to the world’s leading satellite operators.

•    The island is home to industry-leading not-for-profit associations such as the International Institute of Space Commerce and the Space Data Association.

The local legal community, notably the larger firms, which have expertise in asset financing and dispute resolution, have happily added space law to their areas of ‘expertise’. 

Other jurisdictions highlight their geographical advantages: Singapore for South and South East Asia, Sweden for East v West neutrality and Dubai for the Middle East.

The approach from the Dublin Dispute Resolution Centre is interesting. It highlights its specialism as support for foreign direct investment (FDI). It does not claim any radically new or innovative approach but just to have made adjustments to support businesses and contribute to a business-friendly environment.  


Part 1: What makes an attractive Commercial Dispute Resolution Centre?

–   Local specialism: Developing a local specialism gives institutions distinct advantages. In the US, Delaware is the preferred choice for 47% of M&A disputes, amounting to more than $1 billion annually. The Isle of Man serves as jurisdiction of choice for maritime limitation claims due to its local law and Paris’s ICC is the most commonly used institution for arbitration – about 56% of global market share.

–   Geographical location/time zone: Clients of CDR centres in Ireland, Dubai, Isle of Man, Scotland, Singapore have cited their location and time zone as significant advantages.

–   Speed: Streamlined systems are more appealing and make a better experience for clients. In Ireland, 90% of commercial cases conclude within a year. In Dubai, the e-registry means 90% of small claims are resolved within 3 weeks. The majority of cases in England and Wales are resolved within 6 months.

–   Common law legal system and an independent and experienced judiciary: Ireland, Dubai, London, Isle of Man, Scotland, Singapore have proved to be attractive to CDR clients.

–   Access and expertise: Breadth and depth of local legal expertise as well as openness to foreign legal experts found in London, Paris and Singapore have proved attractive.

–   Supportive government and legislative environment: CDR clients are more comfortable working within a jurisdiction where both government and legislation are supportive of litigation alternatives.

–   Excellent facilities and supporting services:  Premium facilities draw in clients, with many mentioning London’s Rolls Building, Singapore’s Maxwell Chambers, as well as centres in Dublin and Scotland.

–   Enforceability: Support from the courts for the implementation of arbitral agreements is essential. This is mentioned by all but is not a differentiating factor since most jurisdictions are now signatories to the New York Convention.